Transat agrees to Air Canada takeover
Shareholders of Transat AT Inc. approved a reduced takeover bid from Air Canada, despite the last-minute revelation of a competing offer.
Transat investors voted 91 per cent in favour of the revised $5-per-share bid, which includes the option to take Air Canada shares instead of cash. The outcome was announced less than two hours after Transat said it received an approach from another potential buyer that its board rejected.
“In late November 2020 Transat received an unsolicited proposal from a private investor, who is not actively involved in the airline and tourism industries,” the Montreal-based company said in a release Tuesday. The board considered it, but unanimously determined it didn't represent a “superior proposal.” It didn't name the investor.
Transat shares gained 17.58 per cent to close at $6.22 in Toronto. Air Canada rose 0.92 per cent to $26.34.
The shareholder meeting was one of the final stages of a long, strange flight that began in April 2019, when the vacation tour operator disclosed it was in preliminary talks on a sale.
Air Canada's initial offer was for $13 a share, but Transat's largest holder, Letko Brosseau & Associates Inc., balked. Air Canada raised it to $18 to seal a deal in August 2019. Then the pandemic hit. Transat agreed to a 72-per-cent price cut in October — with Air Canada offering the option of 0.2862 of its own shares for every Transat share.
When global airline stocks took off on news of successful trials of COVID-19 vaccines, so did Transat's, trading as high as $6.35 in early December.
The pact is the best path forward for Transat, especially during the pandemic, CEO Jean-marc Eustache said.
Canada's regulators still must approve the deal, while the EU 's antitrust commission has until Feb. 9 to conclude its review.